Two of the most common types of insurance are life insurance and health insurance. While they may seem similar on the surface, they serve different needs and offer distinct benefits. How do you distinguish one from the other? When it comes to life insurance vs. health insurance, which can serve you and your family better?

What is life insurance?

Life insurance is a type of insurance that pays out a sum of money to your beneficiaries when you pass away. The regular premium payments you make as the plan holder cover this sum.

Life insurance is crucial as it can provide a bit of cushion for the beneficiaries to use for their needs or to address expenses incurred from the plan holder’s death. Getting life insurance is a must, especially for sole income earners in the family, parents with young children, and parents with special needs children.

Different types of life insurance

Term insurance

It provides coverage over a specified length of time—ranging anywhere from five to 30 years—as long as monthly premiums are paid. This type of life insurance pays out a fixed amount to the plan holder’s beneficiaries so long as the death occurs while the plan is active.

Whole life insurance

It is a form of permanent insurance that pays out benefits upon death regardless of the plan holder’s age. The regular premium payments can be accumulated into a fund, which pays out cash dividends that can be used while the plan holder is still alive.

Endowment

This type of plan provides insurance coverage for a limited time or up until a certain age so long as regular premium payments are made. A lump-sum payment is given to the beneficiaries either at the end of the coverage period or upon death. It can provide dividends, too.

Variable life insurance

This is a combination of life insurance and investment, giving plan holders various investment options depending on their risk appetite. The term “variable” refers to the possible change in investment values, making premium payments more flexible.

What is health insurance?

Health insurance is a type of insurance that covers medical expenses. It pays for hospitalization, surgical, and possibly dental expenses you may incur during coverage period. You can avail of additional benefits to cover certain medical services and treatments, especially for critical illnesses. Some insurers, however, may require these procedures to be done only at select hospitals or healthcare providers.

Having health insurance in the Philippines is essential for families, especially mothers, as maternity and medical expenses can take a toll on your finances. It also gives you and your family a financial safety net in case of medical emergencies.

Factors to consider when choosing insurance

It’s not enough to simply compare life insurance vs. health insurance when thinking of which plan to get. To help you decide which type will address your concerns best, here are some factors to consider before purchasing a plan.

Your goal

Life insurance benefits are meant to cover the needs of your dependents when you pass away, especially when it happens unexpectedly. Meanwhile, health insurance specifically covers medical expenses—from treatments to procedures and services.

If the needs of your spouse and kids are a more pressing concern, getting life insurance would be best. If covering unexpected illnesses is your priority, health insurance would be more appropriate.

Dependents

Life insurance can be more helpful if you have dependents—whether you’re a parent with young kids or your family’s sole breadwinner. The payout from a life insurance plan can act as a cushion fund to help your beneficiaries through the loss in the event of your passing.

You can start with basic family insurance without all the complex terms. PamilyaProtect is an easy-to-understand, affordable family insurance that provides accidental and life insurance coverage for your whole family.

If you don’t have dependents, health is one of your biggest investments, enabling you to work and enjoy life. With health insurance, you can have the resources to keep your health in check, lessening your risk for illnesses.

Coverage period

It’s important to consider the scale of your needs when you select a policy. Life insurance plans tend to span over long periods of time or mature when the plan holder reaches a certain age. They provide more long-term insurance coverage, making it unlikely to address any current needs.

Meanwhile, health insurance doesn’t have any direct payouts. Instead, they cover doctor’s appointments, lab tests, or hospitalizations throughout the coverage period. This means that health insurance plans are better for more short-term needs.

Risk

Aside from fulfilling needs, insurance plans serve to mitigate risk in your life. Life insurance addresses the risks of death and the loss of security of your dependents by providing benefits to them. Meanwhile, health insurance addresses the risks of illnesses and health problems by covering or reimbursing certain costs to either prevent or treat these problems.

Depending on your occupation and lifestyle, you can get either life or health insurance (or both) for the risks you face.

Age

Age plays a big part in deciding what kind of concerns and risks you want to address with your insurance plans. Older people are more at risk of health complications, while younger people may not have enough cash set aside to cover devastating emergency expenses.

Generally, young professionals with no dependents are better off with health insurance alone, while parents and older individuals may need to invest in both life and health insurance plans.

Life Insurance vs. Health Insurance: What's best for me?

In a nutshell, life insurance provides your beneficiaries with the means to live, while health insurance covers the treatment and prevention of any health problems you may encounter. Deciding which one to get depends on your circumstances. Both types of insurance plans provide you and your loved ones safety and security in times of need. The difference lies in when you’ll most likely be faced with these needs and how they should be addressed.

BPI AIA provides both life insurance plans and health insurance plans that work for different types of budgets and needs. Talk to a Bancassurance Sales Executive today and take a step towards a better future.